Portfolio Management

Portfolio management is the art and science of selecting and managing investments that meet the long-term financial objectives and risk tolerance of a client or a company. Portfolio management requires the ability to make trade-offs, from debt versus equity to domestic versus international and growth versus safety.

Portfolio management may be either passive or active in nature.

Passive management is a set-it-and-forget-it long-term strategy. It may involve investing in one or more exchange-traded (ETF) index funds. This is commonly referred to as indexing or index investing. Those who build Indexed portfolios may use modern portfolio theory (MPT) to help optimize the mix.

Active management involves attempting to beat the performance of an index by actively buying and selling individual stocks and other assets. Closed-end funds are generally actively managed. Active managers may use any of a wide range of quantitative or qualitative models to aid in their evaluations of potential investments.